Yesterday, Joe Konrath provided a detailed analysis in the comments to a recent post discussing whether agency pricing was in the best interests of authors or not.

Joe was a long way down in the comments and Passive Guy didn’t want you to miss these:

1. Agency pricing has hurt legacy authors. If I were in control of the 8 books of mine that Hyperion, Hachette, and Berkley have the rights to, I’d be selling a minimum of 5x as many. I come to this number by comparing the sales of their overpriced editions to my $2.99 self-pubbed novels. I stopped counting the money I was losing when I reached $200,000, because it was giving me an ulcer.

I’ve shown, time and again, that a lower price more than makes up profit in volume. I’ve begged my publishers to drop prices. They haven’t. And as a result, we both earn much less than we could. But there’s a reason for this. It is:

2. Legacy pricing isn’t to prevent a monopoly by Amazon. It’s to slow down the eventual demise of print.

Publishers control print distribution. That’s how they make their money and pay for those Manhattan offices. They want the print system to continue. So by controlling price they can keep ebooks expensive and sell more paper. This annoys readers, and the authors smart enough to know what is actually going on.

3. The whole idea that people are “conditioned” to pay a certain price is absurd. We pay for the things we want, and if we want them badly enough, we pay a lot. But we compare like to like, and there is supply and demand at play.

Ebooks are an unlimited supply. The cost pennies to reproduce and distribute. They aren’t tangible and can’t be resold.

An ebook is NOT analogous to a hardcover. Because readers are used to paying $25 for a hardcover does not mean they’ll be thrilled paying $12.99 for an ebook. Apples and oranges.

The goal of a business should be to find the sweet spot between pricing and profit, taking volume into account. That’s how revenue is maximized.

Besides, readers are apparently NOT conditioned to high ebook prices, and are boycotting expensive ebooks and giving them 1 star reviews by the hundreds. Only a fool refuses to listen to their customers.

Publishers SHOULD cut their prices to $2.99. They’ll sell more and earn more. And it won’t hurt my self-pubbed sales, because then readers would be able to buy more ebooks.

Currently, someone with $15 to spend can buy a Patterson ebook and a Konrath ebook.

If Patterson were the same $2.99 price as me, I believe it is likely that the reader would buy two Patterson ebooks, and two Konrath ebooks, and then perhaps even try someone else. Low prices foster a buffet mentality, where people consume more than they normally would.

As for “the biggest books in print appear to be the biggest ebook sellers”, look for that to change. Most NYT bestsellers are such because of distribution–they’re EVERYWHERE. You can’t get away from a new Lee Child or James Patterson release.

Naturally, the more places books are for sale, the more they’ll sell. And those buying new ereaders will gravitate toward the familiar.

But when print sales really start to drop off, I predict that the correlation between print and ebook bestsellers will really begin to differ. Especially if legacy publishers sell Stephen King ebooks at $18.99, as with his new release.

Consumers put up with it now. But that will happen less and less.

The agency model is a huge fail, and I’ve likened it to selling a few more drinks on the Titanic before it sinks.

7 Comments to “Agency Pricing has Hurt Legacy Authors”

As both author and reader, I have only to look at how my own book purchasing has changed to say I agree. I now buy five times a many ebooks as I did print and can’t recall when I last purchased a hardcover, which used to be frequently. I read more books than ever and with indie pricing, am quick to try new authors when I would have been reluctant at print prices.

I couldn’t agree more with Joe. A while back I wrote a reply to a thread that publishers are in this business to make a profit, by regulating the supply to the demand (nothing wrong with making a profit.) I was rebuffed by a published author in that the publishers’ mandate was to publish fine writing and the profit was kind of irrelevant. I guess making an obscene profit on e-books, while paying the authors a few more pennies, improves fine writing? Big publishers know one business model, regulate volume, price high, and maximize profits. Lower prices and large volume, while still making a profit may be a concept written in a foreign language for them. Of course, the large overhead these publishers have may not give them any choice but to price themselves out of the business.

It’s good to see iconic authors like Konrath giving voice to this. Many of us were in the severe minority 10+ years ago when we said traditional publishing models were doomed. Some of us going the self- and e-pub route at present are still being told we’re “making a mistake.” We are surrounded by traditional-only authors who insist that print will never die (Okay, there is POD, granted), and that this price-lowering push will “ruin publishing” and is “bad for authors,” etc.

Those of us who were sure of the publishing model demise were unsurprisingly working in the IT industry. It had just gone through huge upheavals for survival. And, it had moved to a more consumer-driven model, relying heavily on sales volume and expense control–and quelle surprise–better management, to stay afloat. Some firms couldn’t adapt fast enough and went under.

There’s one very scary problem with trying to hold all of your prices high to prevent the inevitable demise of the print portion of your business, as Konrath was saying. To do so is to accelerate the very thing you are trying to slow! The approach Konrath observes among publishers leaves a house’s energy focused on sustaining their old model, rather than creating new possibilities, which they must put in place immediately to ensure their people will have jobs next month. This is akin to going nowhere, but much faster.

I feel for the people who are now, and will be, losing those jobs because their employer does not play well with others and is too insular and prideful to seek the help of leaders in other industries who have experienced the same. I know Jobs is out, but even Gates could help them at this point. Our peers meant well when they laughed at the idea that print would go away or at the idea of self-publishing being viable. Many were trying to educate and caution new writers using the only frame of reference they’d ever had. They truly believed (and many still do) that all the NY houses and the tried and true business models would always be there, permanent fixtures in our culture. “Permanent” should be changed to a swear word at this point in our culture.

I’d dearly love to think that our perception of glaciers as unchanging, fixed parts of our reality could be made so by the same simple refusal to face the facts. Some days I really hate that history repeats itself, almost without exception.

I have the rights to all my books. Hit #2 yesterday overall on Nook with a new release. Publishers are protecting themselves at the expense of authors. I see more ebooks in one day than Random House could in six months. Those who cling to traditional publishing will go down on the ship with them. It’s not about emotion, it’s about reality.

Is it agency pricing, though, or publisher stupidity? (For instance, I’ve seen some Orbit ebooks at substantially lower prices — 4.99, I think one was — and I know they’re offering the occasional 2.99 short story.)

I can’t think of any self-pubbed author who would be happy to see their stuff discounted by Amazon or B&N, whether they’d chosen a “reasonable” price or not.

(That said… Publisher Stupidity, using the tool of agency pricing, most definitely is hurting authors. And I include at least one e-publishing-only house in this!)

Good or bad, I have to agree that I’m very reluctant to spend over five dollars on an ebook.

I found a book the other day on my Nook that I’m very interested in (Wired for War, PW Singer). I would have gladly plunked down $20 (probably not $25, though…) for a glorious hard-cover that I could have added to my living-room shelf and used as a conversation piece with friends interested in the looming robot apocalypse.

However, when I saw that they wanted me to pay $12.99 for the ebook download, I winced and shied away. I really want the book, but that’s just too far over my comfort-zone for buying something I will never hold in my hands, never be able to lend to my friends (who don’t have Nooks), and might lose entirely when I eventually get rid of my Nook in favor of a better device (maybe the iPhone 7).